Posts Tagged ‘Gold Bullion Forecasts’

The only time people seem to be happy with the Federal Reserve these days is when there is a massive injection of money into the markets. We call these programs Quantitative Easing, and despite the official announcement of the third round there are still fundamental problems in the US employment numbers and the housing market.

Perhaps those two areas more than any others are the basis for the US economy, and when we see very little quantifiable growth in these areas, such as is currently the case, we need to evaluate our positions on the economy.

Luckily, whether the economy is good or bad there is an asset available that can store, transfer, and accumulate wealth: gold bullion. Gold has an inherent value that is fundamentally predicated on its scarcity in society. This is why gold has been treasured through the ages in civilizations across the planet. Gold is valued in the most diverse of cultures with absolutely no contact between each other and it is a testament to the inherent value of gold.

In times of troubles, as we have seen recently in countries like Zimbabwe, gold becomes the de facto reserve currency and the only reliable currency of exchange between people. While the currency in Zimbabwe reached hyperinflationary extremes and the central bank began printing multiples of million-dollar notes, the populace ceased using the currency at all, relying instead upon gold that was panned from the African landscape in rivers and streams.

The Federal Reserve is printing money like tomorrow came and went and we have yet to see how it will fully affect the money supply. We know from previous rounds that the money-printing will take years to fully register their effects on our economy and what we have seen so far in terms of recovery is lackluster at best.

Paper currency has always been faulty, and in this economy it is doubly untrustworthy. The wisdom and fundamental strength of gold bullion is what we come to rely on and realize in times like these.

The reason Warren Buffet is opposing gold is the exact reason why a gold bullion believer purchases the 5,000 year-old precious metal…it doesn’t do anything or go anywhere. It’s a sad day when a person like Buffet turns his back on such a wealth preserving asset. One would think a man with his long-term investment record would know better. I mean just look at his transition from investing in private non-financial businesses to being on the side of the establishment and employing his institutional weight to acquire very attractive deals in suspicious banking institutions that the regular citizen would never be capable of. At one point he was representative of the majority and now, regrettably, he is an agent for the super elite.

Why Stocks Beat Gold and Bonds, Buffet’s most recent written communication, published in Fortune, might probably be the one of the most exasperating documents that he has produced yet. Within this document he, being the astute investor that he is known for, appeals to the necessity of preserving one’s purchasing power against widespread state inflationism. Due to the reliance upon the printing press, the US dollar has endured an overwhelming decline of real value since 1965, about 86%, according to Buffet. Along with this, he manifests his dissatisfaction for investments that are currency-sustained and dependent upon unstable fiat money which is hastily inflating. Subsequent to this, he turns on gold justifying rather weakly that purchases are merely illustrating ‘greater fool’ theory, readily anticipating new surges in price that will sponge up new purchasers ceaselessly.

But then he has considered silver in the past which did not go well for him. Maybe he has something against the precious metals because he carelessly states that while gold’s utilities include being industrial and decorative, “if you own one ounce of gold for an eternity, you will still own one ounce of gold at its end.” Isn’t that what we’re hoping? I don’t know if anyone else makes sense of that, but I can’t.

He goes on to compare a pile of inert gold and its inability to be matched up against a pile of farmland and Exxon Mobile stock of the same nominal value in terms of productive utility. It’s not even a valid comparison. He should have matched the precious metal up against Treasury bills, or something of the sort. His intent is clear, though, with all his effort in supporting America and its powerful stock market. I believe I heard the national anthem in the background.

But then he probably wouldn’t have had the effect he wanted even with T-bills because their average yield, under the umbrella, dropped to merely 0.9%. If we were to foolishly agree with Buffet about gold being in a bubble, then how would we portray T-bills? Stratton Street and their credit specialists call attention to the more than $10 trillion marketable Treasury securities that were outstanding in January, despite their average yield. We are all aware that US consumer price inflation is outrageously controlled, but we will ignore that, for the moment, and take it for what it’s allegedly worth which is currently 3% year-on-year. Does anyone else see the illogicalness to this? Because he endorses that “bonds should come with a warning label,” but in manifesting such loyalty to T-bills, he does appear to be obsessing over liquidity, yet with no expectation of acquiring a significant return which is why the entire document is not up to par with what gold bullion is capable of nor how important it really is to wealth preservation.

Even the most skeptical investor cannot refute the inverse correlation between dollar values and the spot price of gold. Well, gentle readers, despite bullish gold bullion forecasts, there is little denying that our once almighty dollar has fallen into some pretty adverse conditions, especially in the midst of government imposed “stress tests” on our nation’s top banks, to generate more capital. Gold bullion forecasts are also looking especially inversely to our nation’s first quarter GDP (Gross Domestic Product) decline of 6.1%. This decline follows a year 2008, fourth quarter GDP decline of 6.3%, which makes this the first time since 1947, that two consecutive fiscal quarters have suffered a GDP decline of more than four percent. Many financial experts fear that our country is headed for a long-term inflationary cycle, which is why so many gold investors are optimistic about this month’s gold bullion forecasts.

As I’ve stated, spot price projections for gold this month, are looking bullish. Gold is expected to meet some resistance at around the $910 mark, and again at the $930 range, then to ascend as high as $960 by the end of May. Gold has been projected to surpass its’ all-time of $1030 by early summer, then to ultimately reach as high as $1500 by mid, to late summer. Even the most cynical of skeptics can see the inverse correlation between floundering dollar values, and the latest gold bullion forecasts. Though it is true that these are merely projections, it still took a long time for our economy to reach the state that it’s in, and these latest bullion forecasts are worth at least a little consideration.